Dollar regroups before inflation test; yen brushes off Tokyo CPI
dollar was licking wounds against peer currencies on Friday after a downward revision to U.S. GDP for the first quarter suggested room for rate cuts this year, while investors braced for inflation data.
Official data showed overnight that the U.S. economy grew at an 1.3% annualised rate from January through March, down from the advance estimate of 1.6% after downward revisions to consumer spending.
Meanwhile, New York Fed President John Williams on Thursday said he feels there is ample evidence that monetary policy is helping to bring inflation down.
U.S Treasury yields, which had boosted the greenback to its highest since May 14 at 105.17 on Thursday as they marched to multi-week peaks, slipped on the revised GDP data. [US/]
The dollar index, which measures the currency against six major peers, last consolidated around 104.76 after dipping as low as 104.63 overnight.
The data revisions and comments by Williams have revived hopes for a cut sooner rather than later, with traders looking past higher PCE prices in the revised data to focus on lower consumption and growth, said Matt Simpson, senior market analyst at City Index.
Markets currently priced in a 55% chance of rate cuts to begin in September, up from 51% a day before, according to the CME Group's FedWatch Tool.
The market now prepared for the release of the Fed's preferred measure of inflation, the Personal Consumption Expenditures (PCE) price index, for further indications on how the central bank might proceed with interest rate cuts later this year.
